FOREX-Dollar rebounds after strong U.S. data, ahead of Fed minutes

Reuters Staff

5 Min Read

* Upbeat U.S. manufacturing, construction data boosts dollar
* Investors await Fed minutes for clues to rate hike outlook
* Coming Up: U.S. payrolls report Friday
(New throughout, updates prices, market activity, comment and
table; new byline, changes dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 3 (Reuters) - The dollar rallied on Wednesday
after upbeat U.S. manufacturing and construction data, snapping
a three-week losing streak as investors awaited the release of
the Federal Reserve's December policy meeting minutes.
The U.S. currency was on track to post its largest daily
gain in more than two weeks. Gains accelerated after data showed
U.S. construction spending rose 0.8 percent in November to an
all-time high of $1.257 trillion, driven by a surge in
investment in private residential and nonresidential projects.
At the same time, a U.S. manufacturing index as measured by
the Institute for Supply Management rose to 59.7 last month,
beating market expectations.
"U.S. manufacturing had been sliding since last autumn but
today's uptick will fill investors with confidence about seeing
a first rate rise of 2018 sooner rather than later," said Dennis
de Jong, managing director at UFX.com in Limassol, Cyprus.
"Dollar bulls will be hoping this latest reading can stop
the rot for the currency."
Still, analysts remained skeptical about the dollar's
near-term prospects, noting the expected rate hikes have been
priced in. Some also said modest U.S. inflation may encourage
the Fed to go slower in raising rates.
"Gains could be tough to sustain for the dollar, barring a
meaningful rise in inflation," said Joe Manimbo, senior market
analyst, at Western Union Business Solutions in Washington.
In late morning trading, the dollar bounced 0.3
percent to 92.18 after falling 2.5 percent the last three weeks.
The dollar's 10 percent drop in 2017 was the largest annual
decline in 14 years.
Friday's U.S. non-farm payrolls report should provide more
clarity about the outlook for interest rates this year.
For now though, Timothy Graf, head of macro strategy for
EMEA at State Street Global Markets, said there seems to be very
little going on with the dollar as the U.S. economy continues to
see easy financial conditions with accompanying fiscal stimulus,
Real interest rates in the U.S. were holding near their
lowest in nearly five years, according to Thomson Reuters data.
The euro, meanwhile, slid 0.4 percent to $1.2010
after hitting a four-month high of $1.2081 on Tuesday, up
roughly 3 percent from a mid-December trough.
The single European currency has been supported by improving
prospects for the euro zone economy and expectations the
European Central Bank will wind down its bond-buying stimulus in
2018.
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Currency bid prices at 10:47AM (1547 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.2016 $1.2057 -0.34% +0.17% +1.2068 +1.2004
Dollar/Yen JPY= 112.4300 112.2800 +0.13% -0.21% +112.4900 +112.1800
Euro/Yen EURJPY= 135.10 135.38 -0.21% -0.06% +135.4900 +134.8100
Dollar/Swiss CHF= 0.9778 0.9714 +0.66% +0.36% +0.9797 +0.9712
Sterling/Dollar GBP= 1.3511 1.3586 -0.55% -0.01% +1.3612 +1.3497
Dollar/Canadian CAD= 1.2527 1.2510 +0.14% -0.40% +1.2537 +1.2500
Australian/Doll AUD= 0.7833 0.7829 +0.05% +0.41% +0.7843 +0.7806
ar
Euro/Swiss EURCHF= 1.1753 1.1714 +0.33% +0.55% +1.1762 +1.1701
Euro/Sterling EURGBP= 0.8893 0.8874 +0.21% +0.11% +0.8896 +0.8848
NZ NZD= 0.7096 0.7103 -0.10% +0.14% +0.7110 +0.7074
Dollar/Dollar
Dollar/Norway NOK= 8.1060 8.1263 -0.25% -1.23% +8.1452 +8.0929
Euro/Norway EURNOK= 9.7419 9.8014 -0.61% -1.08% +9.8058 +9.7315
Dollar/Sweden SEK= 8.1732 8.1665 -0.28% -0.35% +8.1886 +8.1594
Euro/Sweden EURSEK= 9.8220 9.8495 -0.28% -0.17% +9.8585 +9.8149
(Additional reporting by Saikat Chatterjee in London; Editing
by David Gregorio)